Can Kirana Stores Beat The Q-Com Threat?

Indian kiranas are agile enough to face the q-com challenge, but it's going to be a tough fight, notes marketing guru Ambi Parameswaran.

A Business Standard editorial on August 26, 2024, emphatically stated that the 'e-commerce policy should aim to enhance competition'.

As I spoke with experts with deep experience in the e-commerce domain, I realised that there is no single definition of what is broadly called e-commerce.

And that taming the e-commerce dragon is well out of the question.

At one end of e-commerce is the sale of services conducted entirely through electronic means, with just a few clicks on your mobile phone.

You can buy an insurance policy and pay for it all via your smartphone. The same can be said for airline tickets, movie tickets, or hotel rooms.

Then there is e-commerce used by brands that sell products. Ola e-bikes, for example, are sold entirely online.

You place the order, and the bike gets delivered to your home (Ola is also setting up its own consumer contact points now).

And then there are products that are sold both online and offline, and here again, there are many variations.

Brands like Nike sell shoes from their own stores as well as from their website and other e-commerce platforms.

Consumers can be 'webroomers' (search online, buy offline) or 'showroomers' (search offline, buy online).

While Nike is a global player, small brands are also able to sell across the country through the e-commerce medium.

They don't have the brand pull of Nike, and not many people would stumble across their offerings without the help of e-commerce platforms.

These platforms provide small manufacturers a window to the world. Several I am familiar with say categorically that e-commerce platforms are a great blessing.

Even when I probed them about the loss of customer data (since the platforms own the data), they felt the upside was substantial.

One person even remarked, "Customer data is overhyped."

Big brands don't share this view; Nike, for instance, aims to sell more through its own website and stores to control the entire customer journey.

But a small manufacturer of kurtis or agarbattis is less concerned about the loss of customer data.

Then comes the kirana merchant, who is facing multiple threats.

Two decades ago, it was modern trade outlets. As I argued in an article in the Hindustan Times (January 28, 2024), the Indian kirana is a master of survival.

They've adopted digital technologies, UPI payment interfaces, quick delivery, and more. But is there a new threat looming ahead?

As an expert told me, the local kirana survived the formidable modern trade thanks to its locational advantage.

It was simpler to walk across to the kirana and buy what you needed, while the tortuous drive to the supermarket didn't justify the discounts offered -- unlike US shoppers, who buy discounted groceries monthly from Costco/Walmart and store them in their large homes/garages, urban Indian homes are small.

The kirana survived modern trade. Then, about ten years ago, e-commerce platforms and marketplaces arrived.

They offered great discounts but had limitations.

You needed to be sure of when delivery would arrive.

And if you were in the next building chatting with a friend, as most Indians tend to do, you'd miss the delivery.

This last-mile or last-minute problem has been solved by quick commerce (q-com) merchants.

They offer a limited range of products, but a good variety nonetheless.

The discounts aren't at Costco levels, but they promise delivery within 10 or 15 minutes.

This model is a winning proposition for densely populated cities.

While all q-com merchants are still losing money, they seem to be making an impact.

The question remains: Can they get a large enough segment of Indian consumers to switch, and how will the kiranas adapt?

As an expert in this domain mentioned, the kirana merchants are inherently inefficient.

They survive because they often own the real estate (or pay rents at old rates), and the family runs the shop, so there are no or minimal salary costs.

This allows them to operate with low margins despite inefficiencies.

Try buying a large pack of liquid detergent from your local kirana, and you might hear excuses like, "The company guy hasn't come yet," or, "The last pack was sold yesterday."

That said, I believe the humble Indian kiranas will not give up without a fight.

They are seeking government support for their cause, and I wish them all the best.

Some savvy kiranas are already evolving -- becoming specialist gourmet shops, mini-supermarkets, or setting up their own efficient delivery systems.

Some are even expanding their khata system.

Indian kiranas are agile enough to face the q-com challenge, but it's going to be a tough fight.

Ambi Parameswaran is a best-selling author, brand coach and founder, brand-building.com

Feature Presentation: Aslam Hunani/Rediff.com